Share Market Trading and investment is not possible unless you have a Demat Account. The first question which comes to mind in every investor is that which Demat Account is best ?
In this article we will discuss all about the Demat Accounts and will also discuss that what are the features which make a Demat Account as best and which should be preferred by the investors for keeping their shareholdings.
What is Demat Account ?
A Demat (short for dematerialized) account is a digital form of holding securities such as stocks, bonds, and mutual funds. It replaces the physical certificates of ownership previously used to trade and transfer securities. Here are some of the key features of a Demat account:
- Electronic storage: Demat accounts hold securities electronically, making it convenient for investors to trade and settle transactions without the need for physical certificates.
- Safe and secure: Demat accounts are safe and secure, as the securities are held in custody by depository participants, who are regulated by the Securities and Exchange Board of India (SEBI).
- Easy transfer: Demat accounts enable easy transfer of securities, as they eliminate the need for physical transfer of certificates. Securities can be transferred electronically with a few clicks, saving time and effort.
- Trading facility: Demat accounts also offer trading facilities, allowing investors to buy and sell securities online through brokers or trading portals.
- Portfolio tracking: Demat accounts provide investors with a consolidated view of their investments, enabling them to track their portfolio performance and make informed investment decisions.
- Loan facility: Demat account holders can also avail of loans against their securities held in the Demat account.
Overall, Demat accounts offer investors a safe, convenient, and efficient way to hold and trade securities in digital form.
Demat Account is just like your Bank Account. In Bank Account you deposit your cash and cheques. In Demat Account your shares and securities are deposited. Unless you have a Demat Account, purchase and sale of shares and securities is not possible.
Anybody who wants to invest or trade in share market securities, therefore, will have to open a Demat Account with any Broking Company.
How to select the best broking company for opening the Demat & Trading Account ?
Demat Accounts are opened by the Broking Companies. While choosing the best Demat Account, the following points should be kept in mind:
- Please check that there are no Annual Charges or other hidden charges for opening the Demat Account
- In most of the cases, Share Trading Account comes free along with Demat Account. Some Broking Companies are offering Zero Brokerage or very nominal Brokerage on the Sale and Purchase of Shares while some other are charging a very huge amount for the Brokerage. While choosing the Demat-cum-Trading Account, it should be ensured that the Brokerage charges are either Zero or very nominal.
- Some Broking Companies are offering instant cash payment on sale of shares without any extra cost while some Broking Companies are giving the sale proceeds in 2 to 3 days. Broking company which is giving the instant amount on sale of shares should be selected.
- It should also be seen while selecting the best Demat Account that which Broking Company is offering free research reports, statement of profit and loss on sale of shares and which broking company is pro-actively providing the customised timely alerts in respect of your holding in the Demat Account. For example, some broking companies provide you the alert by E-Mail or SMS whenever the shares in your Demat Account increase or decrease by 20% in price. Since most of the investors can not keep a track of their shareholdings on daily basis, such timely alerts by the Broking Companies are very helpful.
- Some Broking Companies are being operated by the Banks. If other things are equal, then preference should be given to these companies for opening the Demat Accounts as these companies provide seamless funds transfer from your bank account to trading account and trading account to bank account
If you consider all the above points before opening a Demat Account, then you will be able to find that which Demat Account is best for you.
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